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South African mining production surges 6.9% in August, exceeds expectations

JOHANNESBURG – Mining production in South Africa increased by 6.9% year-on-year in August whilst seasonally adjusted mining production increased by 5.3% in the same month compared with July, Statistics South Africa (StatsSA) said on Thursday.

StatsSA said the biggest contributors to the jump in production were iron-ore, diamonds and gold, adding 1.3 percentage points, 1.2 percentage points and 1.1 percentage points respectively. Iron-ore production increased 9%, diamonds 27.7% and gold 7.7%.

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StatsSA said mineral sales increased by 17.7% year-on-year in July.

The main positive contributors were coal with a 36.3% increase, manganese ore increasing 116.9%, a 59.8% increase in chromium ore, and ‘other’ metallic minerals increasing 106.2%.

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Jason Muscat, senior economic analyst at FNB, said production surged with all components of the index, apart from copper and building materials, registering gains, contrary to our expectation of a small contraction in August mining output.

“While the global environment remains supportive of both commodity prices and output, the August print far exceeded our expectations, and puts the sector on course to make a significant positive contribution to the 2017 third quarter GDP,” Muscat said.

“The domestic environment, however, remains less certain with regard to policy and the relationship between the industry and the mining ministry. For this reason, we will await further data before considering upwardly revising our full year forecast for the sector.”